Design And Effectiveness Of Stock Option Incentive Of Company S

This paper focus on stock option incentive of Company S,its incentive objective is middle management team and key staffs,since the incentive objective in other most companies is for senior management team,thus the motivation,design and effectiveness of the incentive plan will vary significantly.It is expected to offer use for reference to any company who shall use the same incentive plan as Company S by the study of its stock option incentive in this paper.There is concrete analysis of stock option incentive of Company S,including incentive motivation,design and effectiveness,etc.Firstly for the motivation,the purpose for its incentive plan is not only to pay back staffs' hard work during entrepreneurial process,but also fulfill the needs for human resources and long-tern incentive mechanism.Secondly,the incentive characteristic and rationality analysis factors contains incentive model,objective,stock source,exercise price,validity period,and exercise condition,etc.Moreover,event study,financial ratio analysis,efficiency coefficient method is applied to evaluate the incentive effectiveness in this paper.Through above analysis to find out the conclusion,generally speaking that the stock option incentive of Company S is successful,abnormal returns in the day when plan issue goes higher in event study,form short-term wealth effect as capital market hold welcome attitude towards it,and it also shows positive impact on long-term financial performance in financial ratio analysis,efficiency coefficient method.In the last of this paper,it provides practical suggestions with comprehensive evaluation on all factors in stock option incentive.With objective evaluation from different point of views on its effectiveness on company performance,the main contribution is to offer valuable reference for second stock option incentive of Company S,as well as to use incentive plan to improve company performance for other companies.